3P Gives Glenn Kessler 20 Pinocchios For 3 Factual Mistakes

Glenn Kessler has a piece purporting to fact check the response to a Mercatus Center report about Medicare-for-All. Fact checking is more art than science and I disagree a lot with many of the judgments Kessler makes in his piece. But this piece is not about his subjective judgments. It is about three undeniable factual errors that the Washington Post needs to correct in Kessler’s piece.

False Statement One: Provider Payments

Kessler writes:

In doing his research, Blahous decided to follow the text of the Sanders plan and assume that providers — doctors, hospitals, drug companies and the like — would face an immediate cut of 40 percent in their payments.

The Mercatus study says that Medicare-for-All reimbursement rates are 40 percent lower than private insurance rates. But this does not mean that providers would face “an immediate cut of 40 percent in their payments.” That claim could only be true if all provider payments were currently made at private insurance rates. But, as the Mercatus study itself notes, many provider payments are currently made at Medicaid and Medicare rates since one-third of the country is insured through those programs.

It is therefore undeniably factually untrue to say that providers “would face an immediate cut of 40 percent in their payments.” They would only face a 40 percent cut in the portion of the payments they currently receive from private insurance. They would receive no cut in the portion they currently receive from Medicare and would actually see a payment boost in the portion they currently receive from Medicaid.

This is an indefensible statement from Kessler that is both untrue as a matter of reality, untrue as a matter of accurately representing what the Mercatus report says, and grossly misleading to readers about what the Medicare-for-All plan actually does.

False Statement Two: Drug Companies v. Providers

Here is the same Kessler quote:

In doing his research, Blahous decided to follow the text of the Sanders plan and assume that providers — doctors, hospitals, drug companies and the like — would face an immediate cut of 40 percent in their payments.

Kessler’s list of “providers” subject to the “cut of 40 percent” includes in it “drug companies.” This is a mistake. The cut in payments to drug companies is a totally separate matter not included in this 40 percent statistic.

This again is an undeniable error on Kessler’s part. The Mercatus study covers “Provider Payment Reductions” on page 10 of the report and “Drug Costs” on page 13. The Provider Payment Reductions are the ones subject to the lower Medicare reimbursement rates (which Kessler clumsily describes as a “cut of 40 percent in their payments”), not the Drug Costs.

False Statement Three: Provider Payments and Demand

Kessler continues:

In the fourth sentence of the report’s abstract, Blahous wrote, “It is likely that the actual cost of M4A would be substantially greater than these estimates, which assume significant administrative and drug cost savings under the plan, and also assume that healthcare providers operating under M4A will be reimbursed at rates more than 40 percent lower than those currently paid by private health insurance.”

Under an alternative scenario, which assumes these cuts cannot be achieved, national health spending rises even faster than under current law because health-care demand would increase.

The phrase “because health-care demand would increase” is undeniably false. The reason health spending goes up if you do not reduce prices is because the price of each service is higher, not because demand for services goes up.

Once again, Kessler does not know how to read the very Mercatus report that he is fact-checking. Here is Table 2 from the report, the table that assumes Sanders’ provider payment cuts go into effect:

Here is Table 4 from the report, the table that assumes Sanders’ provider payment cuts do not go into effect:

I’ve drawn a red box around the lines that say “added induced demand from increased coverage.” You should notice that the figures in those lines are identical in both scenarios. This means Kessler is wrong to say that failing to cut provider payment rates would increase health spending “because health-care demand would increase.” That is once again untrue as a matter of reality and untrue as a matter of accurately representing the Mercatus report, which specifically says that health-care demand does not increase in the alternative scenario.

These three factual mistakes need to be corrected in the text of his piece and an editorial note needs to be placed on the piece indicating the correction. None of these are judgment calls that you can agree or disagree with. They are all undeniably false claims.

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